Safe Harbor Financial Announces Temporary Pause in Principal Payments and Ongoing Discussions to Modify Promissory Note with PCCU
Rhea-AI Summary
Safe Harbor Financial (SHFS) has announced a temporary pause in principal payments for February and March 2025 on its Senior Secured Promissory Note with Partner Colorado Credit Union (PCCU). The agreement comes as both parties engage in discussions about potentially modifying the Note terms.
The temporary pause is expected to improve Safe Harbor's liquidity by approximately $510,000. While the company is working to finalize a modification within the two-month period, there is no guarantee an agreement will be reached.
The fintech company, which facilitates financial services and credit facilities to the regulated cannabis industry, views this Letter Agreement as PCCU's commitment to support their plans for scaling and expanding service offerings.
Positive
- Temporary relief from principal payments improving liquidity by $510,000
- PCCU's willingness to negotiate Note modifications indicates positive relationship with lender
Negative
- Company requires payment relief from creditor indicating potential cash flow issues
- Uncertainty about reaching final agreement on Note modification
- Need for debt restructuring suggests financial strain
Insights
This debt modification agreement reveals complex dynamics at play for Safe Harbor Financial. The temporary principal payment pause, while providing immediate relief of
Several critical factors emerge from this development:
- The company's stated intention to immediately pursue growth investments with the freed-up capital presents a strategic pivot. While this could potentially enhance long-term value, it's an aggressive move for a company seeking debt relief.
- PCCU's willingness to negotiate suggests confidence in Safe Harbor's business model, but the need for restructuring indicates possible covenant stress or cash flow challenges.
- The two-month negotiation window is notably brief for a comprehensive debt restructuring, suggesting this could be a stopgap measure while more substantial modifications are explored.
For investors, this development presents a mixed scenario. While improved liquidity is positive, the need for payment relief from a relatively modest
PCCU Modifies Credit Facility with Safe Harbor by Pausing Principal Payments for Two Months as New Terms are Considered; Safe Harbor Intends to Commence Making Growth Investments Immediately
GOLDEN, Colo., Feb. 03, 2025 (GLOBE NEWSWIRE) -- SHF Holdings, Inc., d/b/a Safe Harbor Financial (“Safe Harbor” or the “Company”) (Nasdaq: SHFS), a fintech leader in facilitating financial services and credit facilities to the regulated cannabis industry, announced today that it has entered into a Letter Agreement with Partner Colorado Credit Union (“PCCU”) related to its Senior Secured Promissory Note (the “Note”), whereby PCCU has agreed to temporarily pause receipt of principal payments due in February and March 2025, while the parties engage in discussions regarding a potential modification of the Note. The Company is working towards finalizing a modification within the two-month period, although there is no assurance that an agreement will be reached.
“This Letter Agreement represents PCCUs commitment to work with us as we develop new solutions to capitalize on, scale and expand our service offerings,” said Terry Mendez, co-CEO of Safe Harbor Financial. “PCCU’s willingness to engage in these discussions reflects our longstanding relationship. The temporary pause in principal payments is expected to improve our liquidity by approximately
About Safe Harbor
Safe Harbor is among the first service providers to offer compliance, monitoring and validation services to financial institutions, providing traditional banking services to cannabis, hemp, CBD, and ancillary operators, making communities safer, driving growth in local economies, and fostering long-term partnerships. Safe Harbor, through its financial institution clients, implements high standards of accountability, transparency, monitoring, reporting and risk mitigation measures while meeting Bank Secrecy Act obligations in line with FinCEN guidance on cannabis-related businesses. Over the past decade, Safe Harbor has facilitated more than
Cautionary Statement Regarding Forward-Looking Statements
Certain information contained in this press release may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Statements other than statements of historical facts included herein may constitute forward-looking statements and are not guarantees of future performance or results and involve a number of risks and uncertainties. Forward-looking statements may include, but are not limited to, statements with respect to trends in the cannabis industry, including proposed changes in U.S and state laws, rules, regulations and guidance relating to Safe Harbor’s services; Safe Harbor’s growth prospects and Safe Harbor’s market size; Safe Harbor’s projected financial and operational performance, including relative to its competitors and historical performance; new product and service offerings Safe Harbor may introduce in the future; the impact volatility in the capital markets, which may adversely affect the price of Safe Harbor’s securities; the outcome of any legal proceedings that may be instituted against Safe Harbor; and other statements regarding Safe Harbor’s expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intends,” “outlook,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “would,” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions and, as a result, are subject to risks and uncertainties. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors, including those described from time to time in Safe Harbor’s filings with the U.S. Securities and Exchange Commission. Safe Harbor undertakes no duty to update any forward-looking statement made herein. All forward-looking statements speak only as of the date of this press release.
Contact Information
Safe Harbor Investor Relations
ir@SHFinancial.org
KCSA Strategic Communications
Ellen Mellody
safeharbor@kcsa.com
FAQ
How much will Safe Harbor Financial (SHFS) save from the principal payment pause?
How long is SHFS's principal payment pause with PCCU?
What is the purpose of SHFS's principal payment pause?
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